Small Talk: Brilliant but flighty... is that what we really think of entrepreneurs?
A relatively small number of small businesses really do have the power to transform the economy
A new word is needed to describe the class of worker that we are told is our best hope for dragging the nation out of its double dip. It sometimes feels these days as if entrepreneurs have the whole country's economic fate in their hands, such is the insistence from policymakers that only this elite cadre can put us back on the path to growth. Yet the sort of people that, for example, David Cameron – who has talked of how "entrepreneurs are the life blood of the economy" – has in mind do not appear to recognise the description.
There's nothing wrong with the Prime Minister's sentiment – just that it may have been badly expressed. For what most people, including many of Mr Cameron's entrepreneurs themselves, think of when they hear the word is some distance from the reality of the small businesses that really are Britain's best hope for escaping the recession.
Research from Sage, the accounting software provider, underlines this mismatch. Just one in four small business owners associate the word entrepreneur with people who have set up on their own. Rather, Sage's research suggests, they think entrepreneurs are people who may have brilliant ideas, but not necessarily the drive or financial acumen to excel at the day-to-day job of running a business.
Another perception is that entrepreneurs don't get their hands dirty. Rather, according to Sage's study, they're people such as Sir Richard Branson, left, who flit from one project to the next, delegating management responsibility to others. Alternatively, John Cridland, director general of the CBI, hit on another widely held view of entrepreneurs a few months ago, criticising their propensity to sell their businesses when the first decent offer comes along, rather than seeking to build them into national champions. He has a point – Britain certainly doesn't have the depth of mid-sized businesses seen in Germany, for instance – but the attack plays to this idea that entrepreneurs are flighty and short-termist.
Why do these perceptions matter? Well, if we really think that small, fast-growing businesses are the key to recovery, we shouldn't be describing them with a word that potential and existing business founders alike think describes a different type of individual altogether. To do so is to fail to offer encouragement to those we want to support. Moreover, the word has become pervasive. So we have "entrepreneurs' relief", a tax break for those selling start-up businesses, and loans for "young entrepreneurs" to start their own businesses – even an "energy entrepreneurs fund" for SMEs in the green energy field.
A relatively small number of small businesses really do have the power to transform Britain's economy. Analysis from Santander Bank suggests that just 5 per cent of SMEs are responsible for two-thirds of private sector employment – and that these businesses created 170,000 jobs in 2009 and 2010 at a time when the economy was stagnant.
If we want to encourage smart, driven people to start more of these vital growth businesses, we should think of a word other than entrepreneur to describe them – or at least start trying to address misconceptions about what entrepreneurialism really means.
Word is out about voice specialist Eckoh
Look out for results tomorrow from Eckoh, the Alternative Investment Market-listed specialist in voice recognition software, which is popular with call centres and other organisations that take large volumes of calls from the public.
Eckoh's numbers for the year to the end of March will be in line with analysts' expectations – a profit of £1.2m on sales of £10.3m. That's around 15 per cent up on 2011 and is the company's fourth successive year of double-digit growth. There have been a string of contract wins, including the company's first deal with a local authority, Essex County Council.
Eckoh shares are at 10.63p, up from 6.75p last September. But that's still a price to earnings ratio of just eight times forecasts for 2013 and analysts think there may be more upside to come.
Fresh look at American equities
Given that the US is one of the few Western economies that can say it is putting recession behind it, you might expect investors to be taking a close interest in its equities. But while there are buckets of unit trusts offering British investors exposure to US equities, there's a remarkable shortage of stock market-listed closed-end funds specialising in this area. Enter F&C Asset Management, the oldest name in investment trusts, which is now on the road raising money for a new venture in this sector. Sensibly, it intends to contract out day-to-day management of its new fund to a specialist US firm, Barrow, Hanley, Mewhinney & Strauss. The venture is planned to open for business later this month with £100m of assets under management.
Small Businesswoman of the Week
Claire Cairns, chief executive, Bottle PR: PR firms don't need to be based in London to win blue-chip clients
I started in public relations at the age of 18 and by the time I was 27 I realised I could work for myself – there were things about the industry that really frustrated me.
"By setting up outside London, we've been able to tackle one of my bugbears, that after PR agencies have won a pitch, the executives disappear and it's the junior staff who do all the work – we have a flat structure and even executives spend 50 per cent of their time on accounts.
"The other thing we feel incredibly strongly about is accountability – we've just spent nine months building our own proprietary evaluation tool, which will enable us to track the extent of all the key influences we ought to be driving on behalf of clients.
"It didn't happen overnight: I've been running Bottle for nine years now, but for the first two years I was basically a freelancer working on my own. Today we have 30 staff and an annual turnover of £2m. And we've proved that you don't have to be based in London to win blue-chip clients.
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